Barbara Warwas ‘The State of Research on Arbitration and EU Law: Quo Vadis European Arbitration?´ (2016) EUI Working Paper LAW 2016/23

This is not so much a paper as a book – or at least an extended report that can be found here.

The goal of this paper is to provide a systematic literature review of studies on arbitration in recent decades, with a focus on emerging developments in arbitration and EU. Since it is 109 pages long, I will provide only a high-level overview, with detailed discussions of those topics that are of greater interest to me.

Academic studies of arbitration have proliferated in recent decades, partially as a function of the professionalization of international arbitration practice. This abundant arbitration scholarship follows two streams. On the one hand, one can come across research largely revolving around the practicalities of arbitration whose main objective is to reveal how arbitration works in practice. On the other hand, one can find literature on the interplay between arbitration and law. This second type of literature is often more critical than studies on the practice of arbitration. It addresses the deficiencies of private arbitration against the background of orthodox questions on the legitimacy of international law, the powers of States to provide access to justice for citizens, or—most recently—on the legality of arbitration in its different variants vis-à-vis EU law.

Historically, arbitration and EU law were two mutually exclusive regimes. There has been a longstanding debate on the relationship between EU law and arbitration, which gained strength when the CJEU opened the door in Eco Swiss for the potential annulment of arbitral awards by national courts on the ground that an arbitral award is contrary to EU public policy, including EU competition policy. Furthermore, the European Commission has recently either encouraged or directly imposed arbitration (and other forms of so-called “out-of-court dispute resolution”) in a number of disputes concerning EU law. These entail the promotion of consumer ADR and online dispute resolution (ODR) under Directive 2013/11/EU and under the Competition Damages Directive.

A first section reviews the literature on the historic interplay between arbitration and EU law.

In particular, this section focuses on the procedural interplay between these two regimes and on the substantive issues regarding the changing application of arbitration/ADR to disputes emerging in the context of EU law.

Literature on the interplay between arbitration and EU law has examined the actual EU competence in the field of arbitration, and discussed the role that arbitration should play as regards EU law. In short, the trend is to argue for increased EU competence on arbitration, in tandem with arguments for increased recourse to arbitration for the resolution of EU law matters. As regards the procedural interplay between EU law and arbitration, the literature has focused mainly on the scope of the exclusion of arbitration from the so-called Brussels regime on the recognition and enforcement of judgments within the European Judicial Area – which could be explained by the existence of an international regime for the recognition of arbitral awards that dispensed with EU intervention – and on the deployment of anti-suit injunctions in the context of parallel litigation and arbitration proceedings following the West Tankers decision.

An important concern in these debates is that arbitral tribunals are not allowed to make preliminary references to the CJEU. However, failure to apply EU law can amount to a public policy ground to refuse the enforcement of arbitration awards. Most articles that address this matter focus on EU competition law, because the famous CJEU judgment in Eco Swiss afforded national courts the possibility to annul arbitral awards in the course of vacatur proceedings when such awards appear to be inconsistent with EU competition policy. It has been argued that arbitral tribunals could submit preliminary questions to the CJEU indirectly through national courts; furthermore, and mainly in relation to investment arbitrations, it has been suggested that EU substantive law should be amended to allow preliminary references to the CJEU. Note that this report was published before the very important Achmea judgment, which challenged the validity of investment arbitration between EU member states.

A second section looks at literature on specific EU sectors in which arbitration/Alternative Dispute Resolution (ADR) has been recently implemented or encouraged (e.g. consumer protection, competition law, tax, WTO, and regulated sectors such as finance).

As regards competition law, the literature can be divided between contributions pre- and post- the CJEU judgment in Eco Swiss v Benetton International (Eco Swiss) of 1999. Before this judgment, the literature mostly concerned the debate on the arbitrability of EU competition law issues and on the safeguards available to the parties to correct possible errors by arbitrators in the application of competition law. Eco Swiss confirmed that arbitral tribunals could decide on EU competition law matters. However, domestic courts must review arbitral awards with a view to identify possible errors on the part of arbitrators in applying EU competition law. This review is possible even if the parties did not raise competition law issues in the course of arbitration proceedings. Recent literature openly speaks about arbitrators’ duties to apply EU competition law even when the parties did not raise competition law issues in their submission if they do not wish to have their awards vacated in domestic courts where recognition and enforcement is sought. Many scholars see the review of arbitral awards by national court as the most effective corrective and preventive procedure to diminish misapplication of EU competition law by arbitrators.

A third section deals with literature on arbitration practice.

This literature focuses on topics directly applicable to actors involved in arbitration (such as arbitrators, arbitral institutions, and the parties). The topics discussed include transparency in arbitration, the accountability of arbitration actors, and the law applicable to arbitration proceedings. Each category is reviewed in turn.

A fourth section looks at empirical studies on arbitration.

Empirical studies on arbitration have proliferated recently, after years of neglect. This proliferation of empirical research on arbitration can be explained by two factors. First, international arbitration has professionalised, leading to a loosening up of the traditional tight bonds between arbitration practitioners that for many years made the arbitration community an extremely exclusive club. Second, there has been increasing criticism of some forms of arbitration (e.g. regarding the secrecy of investor-State arbitration and the potential bias of arbitrators towards investors).

The most studied topics include: arbitration in the EU and its Member States, investor-State arbitration and arbitrator bias, decision-making by arbitrators, arbitration of non-commercial matters (e.g. employment disputes), and transparency.

Comment:

This is, at heart, a very comprehensive literature review on all matters touching on arbitration and EU law. As such, its interest for competition practitioners is bound to be limited, even as some sections of the report are quite relevant and interesting for them. For academics, this paper can provide an extremely useful resource when looking at these matters.